Q&A with Patrick Wood, Founder and CEO of Tormont Group helping Smaller
Cannabis Companies Gain Exposure across the US and Canada with Institutional
Investors through their Tormont 50 Platform and through their Advisory Arm

Mr. Wood:
Tormont Group, is a boutique advisory that works extensively across border
in Canada and the US. Our mandate is to help smaller companies, one gain
exposure with institutional investors through our Tormont 50 Platform, and
then two through our advisory arm. We also help U.S. based private companies
go public in the Canadian market space - list their shares IPO, attract
funding and research coverage- all the great things that come with being a
public company.

CEOCFO:
Are you taking a position in these various companies? What is your
relationship with the companies you are shepherding?

Mr. Wood:
Generally we do, it depends on the company. Our compensation structure with
these companies was always based on some equity ownership within the
company, and as such we are aligned with the company and investors and the
success of the company.

CEOCFO:
What do you look for when you are engaging with a company?

Mr. Wood:
On the advisory side, we are extensively focused on companies which operate
in the US, in the auxiliary space through the cannabis industry. These are
federally compliant and legal companies and industries such as software,
branding, distribution, and other verticals. They are companies that have a
very high growth model going forward and to have some very good exposure to
what we think is going to be an incredibly explosive space down the road. On
the blockchain side, we are focused on companies that use blockchain or
cases of blockchain technology in their own tech and their own businesses,
and that goes back to them being very high-growth companies that double
their revenues every year. We are always interested in companies that are at
or near cash-flow positive. On our Tormont 50 Platform highlights up to
fifty small and microcap companies to institutions. We really are agnostic
to industry. We are really more focused on identifying small and microcap
companies that have great growth drivers going forward which are relevant
and credible institutional investors.

CEOCFO:
What do you understand on a very fundamental level that allows you to
discern not just from what is on a sheet of paper, whether or not a company
is going to make it? Where does gut-feeling come in?

Mr. Wood:
I have two partners and we are all 25-year plus veterans in capital markets
on Wall Street in the U.S. and Bay Street in Toronto. We have all worn
different hats in this industry – buy side, sell side and research,
etcetera. The one thing that stands out clearly with discerning whether or
not a company is solid beyond the financial state and beyond the business,
is its management and board. Look very closely at the management in business
and if it has been successful in the past. Is it a credible management, is
it a board and management that is ready to go and be exposed to the capital
markets and to investors? That is a big thing for us and it is years of
experience seeing companies and management teams fail for various reasons.
More often than not, when we see a company fail, it is from the lack of
experience in management and board and that lack of experience can lead to a
lack of liquidity in a company, so companies frequently run out of funding
especially in the small microcap space and various other things between
board and management. These are generally managements that do not have a
wealth of experience in running the ship so to speak.

CEOCFO:
When did you recognize where you should be going in cannabis? Have
investors realized they should not be chasing the shiny bubble or the
fly-by-nights that keep jumping into this space?

Mr. Wood:
If you read about the gold rush many years ago, the people who chased the
gold were not really making any money and very few of them every found gold.
I would compare that today to the producers in cannabis. I would look more
at Levi Strauss who sold blue jeans and compared to the people exploring for
gold, they made a killing. I think right now if you look at mature markets
like Washington State, who has been active in recreational cannabis for many
years, and if you look at the sales figures in Washington State in 2017, all
the cannabis sector together did about $1.5 billion in sales and of that
only $67 million was at the producer level. Right now in the capital
markets, it is the producers who are achieving almost all of the capital and
there are very few companies who are attracting capital and who are even
actually public quite yet in the ancillary space. We are looking at cottage
industries around cannabis - the people who sold the pick axes, the shovels,
the jeans during the gold rush; those are the companies that we are clearly
looking for and those are also the companies that happen to be federally
compliant and legal in the US. That is a big thing because of the Schedule 1
(Class 1) listing still in the U.S. However, it is important to play by all
the rules and I think that is going to become more of an issue moving
forward. It already is, especially for Canadians looking to across the
border into the U.S. If you have exposure in cannabis, it better be
federally compliant and federally legal. To be quite frank, not much of it
is right now.

CEOCFO:
Would you tell us about a couple off companies you are working with now?

Mr. Wood:
One of them is POSaBIT, based in Seattle. It is an operating company that
has developed a payment function which allows people who go into
recreational stores across the legal states to use their debit and credit
cards to purchase cannabis and cannabis products within those stores. They
have created an innovative workaround, which is compliant on all levels both
state and federal. This allows at the point-of-sale, the purchase of crypto,
and that crypto is then used to purchase the products in the stores. What is
interesting is they have proven out that concept works, which is appealing
to the stores. It is attractive to consumers as well, because at the store
level it doubles their average ticket size as well as compensates the
budtender in a way that in the past they were only allowed to have a tip
jar. Therefore, just based on functionality of the product that is created,
you are allowed to tip 15% or 20%. People tip more when they actually use
credit and debit. They have proven out that concept, and they have also
integrated that payment functionality with a very sleek point-of-sale system
and solution, which allows stores from seed to sale, tracking integrated
within that. This allows them to monitor and collect data on what their
customers are looking for, what they want, what their past purchase
experiences have been and it creates a better overall store experience. That
software solution is very exciting because one is agnostic. It is something
that does not exist out there and the recreational space in the U.S.is
growing very quickly. They created the product and they have brought the
management behind them that has a pedigree of doing this in the past as they
were top-of-game in software development. That is a very exciting company.
There is not company like that which is going to be publicly traded and that
makes us excited because we are in the final stages working with them and to
bring them public in Canada and so far public response has been positive
toward them.

The other company we are working with is a company called MetaCan, which is
based out of San Francisco and Atlanta. MetaCan has the only DEA controlled
substances, and FDA compliant CBD hemp formula. It is a nutraceutical that
sells under the name of Hempfusion, so if you go to hempfusion.com, you will
find it there. It is the only CBD product that is widely distributed in
stores across the US but it is the only one today that actually if fully
compliant with the FDA. To know what that means, go to GW Pharmaceuticals,
PLC, (OTCMKTS: GWPRF) and GW Pharma recently got FDA approval for a drug
called Epidiolex®, which is a CBD based product that is developed to be used
in the treatment of certain rare and catastrophic forms of childhood-onset
epilepsy. Anyone that was not in the food supply before GW Pharma filed
their IND with the FDA, who is selling CBD today in any of its forms are
really outside of that FDA ruling, and their formula was in food supply
prior to that IND being filed. Therefore, we are really excited, but as a
standalone, no one else has the legal framework that MetaCan has created and
nobody has that fully compliant product that they have. From a strategic
point of view, they make a ton of sense for larger players that want to be
in that space at some point if they are not already, as well it creates
amazing opportunity for investors to be involved in a company that will be
growing across the US and that remains fully compliant with all the laws in
the US and certainly with the FDA. Those are the types of companies that we
look for. They check off all the boxes as being vertical to the space
itself, but once again have two business models, who are achieving great
sales and who are going to be cash-flow positive in the near future. These
are heavy growth companies whose revenues are going to be doubling and
tripling every year going forward.

CEOCFO:
Does the investment community and the general public understand CBD and
hemp, or is it still lumped in with cannabis overall?

Mr. Wood:
I think the investment community is broken into a few different stages. At
the top of that community for wealth and knowledge today are investment
bankers and research analysts. The research analysts and investment bankers
know this space incredibly well, particularly at the boutique banking level.
I am talking about mostly Canada here because Canada is at the forefront of
all this activity, although there is now more activity across the U.S.,
which is encouraging as well. From the Canadian investment banking point of
view, especially on the boutique level, it is only recently that Canadian
banks have started to get involved in funding this segment. The bankers
understand all the differences and are fully aligned with what our direction
is going to be. After that I would say that institutional investors are not
far behind, although institutional investors have been somewhat leery of
this segment just because valuations always do play a role and it is hard to
justify valuations to your unit holders or the people who have their money
invested with you. Therefore, there is some reluctance there to dig too deep
into the space. After that, you have retail investors who understand some of
the space but I believe they are chasing a lot of the flash and similar to
other bubbles we have had in the past there are companies in the segment
that are going to have a hard time defending their growth models going
forward. That means the retail investor is chasing the trade, and they are
not really aware of the real play is and cannabis is a great growth segment
but there will be all of these players in the end. Producers are certainly
not the ones who are going to be making the cream of the revenues, it is
going to be retail, software, technology, branding in the space and all of
all distribution. It is not going to be the growers.

CEOCO:
What is the competitive landscape?

Mr. Wood:
I do not think you could go anywhere in the recreational states today and
not run into a Canadian investment bank who is active and looking for
opportunities in this segment in cannabis right now. We know from
associations with our friends that investment banks are very strong and as
such we know they are there quite often. However, from an advisory level we
do not know of any advisory that is actively assisting companies who are
federally legal in all jurisdictions in the U.S., who is doing what we do
right now and can bring good quality companies into this segment to Canada’s
list and go public. We are not aware of any other advisory in this space.

CEOCFO:
What is next for Tormont Group and Tormont50?

Mr. Wood:
We want to continue assisting companies achieve liquidity and going public
in Canada. The Canadian go public structure is very accommodating to smaller
companies and we would like to continue to build that out and gain more
awareness across the U.S. because it is a real win-win especially in this
day of tariffs and border controls. I think what we are doing is probably
one of the greatest win-wins for both countries. On our side in Canada, we
are being exposed of what we are doing at Tormont to make stronger
opportunities and mature markets and that is a win for investors. On the
U.S. side for the companies we are representing, it is a real win for them
because there is not a structure like the one we offer in Canada right now
in the U.S. for smaller companies to go public, to achieve funding and all
the good things that come along with that. Our goal is to increase our
stable of our companies that we are working with and to continue to identify
good quality companies that have great growth products behind them and that
would make a compelling case to investors.

“Our goal is to increase our stable of our companies that we are working
with and to continue to identify good quality companies that have great
growth products behind them and that would make a compelling case to
investors.”- Patrick Wood